With a 28 percent marginal tax rate, would a tax-free yield of 7 percent or a taxable yield of 11.0 percent give you a better return on your savings?
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- Comparing Taxable and Tax-Free Yields. With a 28 percent marginal tax rate, would a tax-free yield of 7 percent or a taxable yield of 9.5 percent give you a better return on your savings? Why?With a 28% marginal tax rate, would a tax free yield of 7% or taxable yeild of 9.5% give you a better return on your savings? why?An interest payment of $650 in a 20 percent tax bracket would result in atax savings of __________________.
- An individual actually earned a 7 percent nominal return last year. Prices went up by 3 percent over the year. Given that the investment income was subject to a federal tax rate of 28 percent and a state and local tax rate of 6 percent, what was the investor's actual real after-tax rate of return?Calculate the annual tax factor benefit or savings from an annual depreciation of $20,000 if you are in a 28% tax bracket.Suppose your principal investment is $1800 and you have a nominal interest rate of 6.5%. what is your nominal interest income? Presume you are taxed at the 22% tax rate, who much will you pay in taxes and what is your after tax nominal income? Presume inflation was 2.7% during the year, what is the loss of principal due to inflation? What is your real interest income? What is after-tax real interest income?
- Assume an individual makes a lump sum investment at the beginning of year one of $38,420, the present value of which is $38,420. The investor’s discount rate, for an alternative safe investment, is 11.40 percent after tax. The expected return on this investment (received at each year-end) is as follows.Suppose you sell a fixed asset for $90,000 when its book value is $95,000. If your company's marginal tax rate is 21 percent, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?What is the payback if an investment’s cost is $45,000 and the after-taxbenefit is $2,000 per year?
- Suppose you sell a fixed asset for $126,000 when it's book value is $157,000. If your company's marginal tax rate is 35%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?Suppose you are in the 25% marginal tax bracket and earn $15,000. Then a tax credit of $1500 will reduce your tax bill by how much?A lump-sum payment of $1,040,000 right now, in which case 45% will be deducted for taxes. We do not know the level of Archie’s investment skills and therefore are unsure what rate of return he will earn on the lump-sum. What is the present value?